Getting a piece of the $22 billion venture-capital pie for your business requires that you meet VCs' stringent standards. See if you come close.

Q. I've done extensive research (online, in trade publications, etc.) to see which venture-capital funds invest in which kinds of companies and what's in their portfolios now.

A. Best answer is "true." If you own a biotech company, pitching it to a fund that invests exclusively in telecom (or vice versa) is a waste of everyone's time.

Q. The business I own now, or one that I started in the past, has shown a healthy profit for three or more consecutive years.

A. Venture capitalists want to see some proof that you know how to make money - or you have lined up a management team that does.

Q. I'm a little shy about introducing myself to new people and telling them about my company's fantastic growth potential.

A. If you don't believe in your brainchild, who will? Go ahead and brag.

Q. I know from extensive conversations with both actual and potential customers that they are enthusiastic about my product or service.

A. Best answer is "true." Investors will want to know you've identified, or created, a solid market for what you're doing.

Q. When things are going well, I don't like to take all the credit but prefer to point out that my whole team helped in our success.

A. Again, venture capitalists understand and respect outsized egos. Giving credit to the team will just make them wonder whether someone else is (or should be) in charge.

Q. If a customer suggests ways to improve my product or service, I listen politely but am unlikely to act on the suggestion.

A. Best answer is "true." Market responsiveness is essential to growth - and growth potential is the name of this game.

Q. Venture capitalists won't need to be concerned about my competitors, since my business plan is so good that I really have no direct competition.

A. Answer is False. Tell a seasoned equity investor you have no serious competitors and you will probably be laughed out of the room.

Q. I have a well-thought-out business plan with realistic two- and five-year revenue and profit projections.

A. The crucial word here is "realistic." Back up your proposal with as many specific facts and figures as you can muster.

Q. I am so dedicated to making this company a success that I will happily put in 12- and 14-hour days even though the venture capitalists hold a big chunk (or even the majority share) of the equity in the business.

A. This sounds like a raw deal - and, to hear many beleaguered entrepreneurs tell it, it is, at least in the short run. But do you want the money or don't you?

Q. Assuming my company is a huge success, I'd like to keep running it for 10 or 20 years - maybe even for the rest of my career.

A. Best answer is "false." From Day One, venture capitalists want to know you have thought about an exit strategy - a plan to either take your company public or sell it, ideally within five years. That's when they get the payout on their investment, and it may well mean you don't get to be in charge anymore. Many a venture-capital deal has fallen through because of an entrepreneur's reluctance to draw up an exit plan.


-Sanjay Tiwari
New Delhi, India
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